Vijay Anand | The Startup Guy.

Radio Stations: Pervasive Entertainment Everywhere

Posted on: August 24, 2007

It seems that Mumbai is the only place in India which has a 24/7 English Radio station. Most of the other cities have these partial stations where there is english programming in certain times of the day, mixed with other regional-language programming.

First question: Why is that?

Secondly, Let me go to a bit extreme. If there were radio stations that played specific genres’ of music all day long, would it work. If not why? Or would it be “Slicing the Market too thin”?

PS: I have something else in mind while posting this. Will make a post on that once there is some discussion on this.

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13 Responses to "Radio Stations: Pervasive Entertainment Everywhere"

Depends on the location and the targetted audience and on the advertisers

Hi Vijay,
Most of the radio stations depend on local advertisements for survival, in most part of the country except say Mumbai, Delhi or banglore i don’t think a 24/7 english radio channel may be a success. Take the case of an NDTV 24/7 lots of people across the country watch it….but if they watch 30 minutes or one hour of NDTV / CNBC..they will spend more time watching a SUN News or an asianet news or an ETV news. ( Further is this the reason why SSMUSIC was a success in south when compared with mtv or channel V in the kerala market).

when it comes to the success of a station positioning itself as a “niche channel” …i do believe there is a good scope for it’s success. I recently heard a leading FM station launched a “Women specific FM” channel in Delhi. A station playing only a specific genre of music can succeed in the market provided there is enough volume in terms of their target audience. ( A station playing carnatic music may have a huge audience, but the number of advertisers who want to target them may be a few).

If there was paid option for FM subscribers, there had been huge scope for various vertical specific stations ( But it’s a matter of time i believe for radio to become subsscription based…..may be once mobile tv arrives via DVB-H or mediaflo standards..the networks will also start offering digital radio as a part of their bouquet).

There already are radio stations that play the same genre all day. All of them are part of worldspace. But the entire worldspace package can be viewed as one big radio station.

The main reason that a single genre radio station may not (I did not say “will not”) work is that people who don’t like that genre will not have a lot of incentive to hear it.

The main reason it may (Again, “may” not “will”) work, however, is the the fans of the genre will have it on all day if possible (I know I would never turn off the all Blues station).

The main problem in any case would be finding advertisers who are willing to put their money in such a station.

Vijay – my two cents

I can compare Mumbai and North India

– I think Mumbai is far more cosmo than metros in N. India (Delhi, Chandigarh, Jaipur) as far as consumption of english content is considered. Even in down south – we all might consume english content on net but when it comes to Print, Radio, TV most of us still prefer to consume regional languages – Hindi in North, Tamil in Chennai, Telgu in hyd etc

– On your second question – need to do some cost analysis of putting a radio station on air and number of listeners for a specific niche content. My guess is you might not able to operationally profitable and grow. Ad revenues will be small. or you might be profitable but not build a sustainable business – need to do some number to answer this

I’ve thought about this a lot – starting from Radio City in Bangalore which was the only station for years, and many a friend became a radio jockey, to today where there are around 10 stations, most of which spew Kannada, Hindi and other language music.

First, the licence fees were extremely high (plus a 15% increase per year) so there wasn’t much interest among broadcasters. So the channels that came about went down the elite route – choosing English music, English speaking DJs etc. Ad rates were not too high as this was a loss leader model.

Soon that changed, and Hindi became a more attractive proposition. So it was: English/Hindi music and English speaking DJs.

Then the government went on a rampage, slashing annual fees to zero, charging a 5 crore entry fee (average, was a bidding process per city) and a 4% revenue share. Around 10 channels suddenly popped up in Bangalore.

In the process, STAR exited their Radio city ownership, and listed players entered the fray, like Mid-day, ENIL etc.

THe new channels decided that elite was not it. Therefore Kannada had to be tapped. That succeeded like crazy – cut to now, when nearly all channels have only Kannada speaking DJs (okay, smattering of English sometimes).

Only one channel – Radio Indigo – remains an English channel. Rather, a non-kannada-only channel.

I don’t see the potential for a pure-English channel, unless the entry fee is also cut to zero and spectrum costs are sub-10 lakh. If you want to operate on the fringe, you could have a Telugu or Tamil channel in Bangalore, a Gujarati channel in Mumbai, a Punjabi one in Delhi etc. which might actually be more popular than the English one.

And with worldspace making all this available, plus the mass availability of Internet channels, the home or the office is no longer useful for an English (or fringe) FM channel.

What’s left? The car. Now you compete with the Ipod FM transmitters, CDs and potentially worldspace car stereos.

Not worth the effort, in my opinion. This is the long tail of radio, except the fundas of the long tail do not apply – in that the cost is too high.

Radio station with specific genre will work.
Simple, people are looking for choices more the choices, there is need for more and more choices.

The bootstrap of audience is not going to be easy though. Players with really deep pockets can conquer the air wave slowly, systematically and reap the benefits for years. A lot programming and backend operations could be centralized for efficiency and cost control/scale.

A mashup of FM radio with Mobile/GPRS can make it really dynamic and interesting medium.

Cheers.
-Balaji S.
twitter: http://twitter.com/twitter

Anish,

Advertisements: Very good point. How does a station sustain itself, and since most of the stations do so by advertisements, it might be hard to attract monetary support when the audience is niche. Well taken.

Prashanth: Well, I am very much looking for a worldspace Radio kit, but there are people who have tried putting the same kit inside a car and the audio “shatters” when the vehicle starts to move. Its still good if you are camping far far away and want to listen to music. For entertainment on the go, technology-wise, worldspace might require some changes – unless they do a conversion to FM streams.

Mukul,

Absolutely agree with you.

Consumption and demographics is your key point and the second is that of cost analysis and having the critical mass of audience to consume such a niche resource – the same that I mentioned as “slicing it too thin”. What you are saying also closely aligns with what Anish mentioned.

Deepak:
You are saying that License fees and content will be in the way and you are basically talking about going for more regional content. Hmm… I do understand the point you are making.

The license fee is definitely a barrier. Are there any scopes of it coming down and for a revenue-sharing model alone?

Balaji: I think FM radio + GPRS is what Geodesic’s Mundu Radio does. It does have a bit of issues streaming, as chennai doesnt have a steady bandwidth, whereas in Delhi, Mumbai and bangalore, the experience is quite good. The question drops down to, “do enough mobile subscribers have GRPS activated?” the answer seems to be “No”, atleast for now.

Vijay,
I was thinking more like GPRS as a feedback mechanism for the primarily analog FM station to ‘sense’/engage their listeners.
One way broadcast is so uncool. But broadcast + back channel conversation/playlist voting etc( through GPRS or otherwise) is cool.
GPRS off take needs a dramatic user behavior change. Entertainment holds the key to induce the change.

-Balaji S.

We most definitely need language specific FM channels. In every city you will find an audience dying to have a radio station which belts out music in the language of their choice. And it is not limited to just English.
Lets say a city as big as Delhi or Mumbai has people from all parts of India, people who speak at least two languages: the local language and their mother tongue. And yes most would also be fluent in English. These migrants constitute majority of the population of these cosmopolitan cities. And all they get to listen on the radio is the local language.
All these migrants given a choice would love to listen to music in their preferred language.
You can take a clue from the number of regional language TV channels (Bangla, Tamil, Kannada) your cable operator is beaming in your city.
For example, if my cable operator removed all the Tamil channels from Air he would loose a substantial portion of his clientele, coz there are number of Tamils living in my locality. Given a choice all of them would prefer to listen to a radio station which belts out Tamil chartbusters.

Vijay: Licence fees have only recently been reduced and the government/TRAI has been clear in most departments (Cable TV, mobile, ild etc.) that they will allow incumbents time to recover the licensing costs before they reduce fees.

In some cases, to limit participation or reduce rampant growth, the government has actually increased barriers to entry – look at airlines or cable tv history.

Now will they reduce entry fees further? Perhaps. It’s not a license fee anymore – it’s a “one time entry fee” plus 4% revenue share (or1/10th of entry fee, whichever is higher). ENIL paid about 20 cr. for bangalore. The smaller cities are lesser of course – order of 1 to 10 crores in the south. http://mib.nic.in/fm/CityWiselist.pdf

Now there still are channels open. There was a recent rebidding tender for FM (http://mib.nic.in/fm/NITVacantChannel.pdf) but the last date was July 23, 2007.

Currently the stakes are high. For a long tail the incremental cost of adding content (channels, music, DJs etc) should be low – in this case that is totally not so. (You will pay about Rs. 1400 per hour of broadcast music to the music industry, a cost that is significant compared to revenues)

If you want to go niche, the revenues must be much much higher than regular content. I don’t know if you’ve analysed ad-rates for Radio, but in bangalore they are horrendously low for a niche set up.

What you can do – and this advice is only worth the money you paid for it – is to strike a deal with broadcasters to pod-cast or rebroadcast their content on the internet as internet radio, to listeners worldwide. Indian diaspora etc.

And there, you can do news as well, something local broadcasters are not allowed to do. You need the contacts and some money to get content; but the actual work needs very little hi-fi technology.

Interesting Points of view..

I had posed some questions (on the venturewoods.org site ) about the financial viability of starting a intellectually-stimulating programs channel (along the lines of NPR) that are partly answered here.

If the cost of licensing a FM channel is so high (>1 Crore), there has to be a decent business model to cover the costs.

[…] / compiled some great thoughts on Radio Stations: Pervasive Entertainment Everywhere The Startup Guy.Here’s some of the intersting bits […]

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